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| Manny Pangilinan with... |
BAD GOVERNANCE UNDER THE DUTERTE ADMINISTRATION
SUSTAINING
STEAM
By:
Cielito F. Habito - @inquirerdotnet
Philippine
Daily Inquirer / 04:04 AM February 11, 2020
…Of
greatest concern should be the drastic slowdown in investment in the country,
from both foreign and domestic investors. Fixed capital formation, after
growing annually at an average of 13.2 percent in 2012-2018, barely grew at 1.5
percent last year. This was because foreign direct investment (FDI) inflows
fell by more than a third (a 32.8-percent annual drop as of the first 10
months, the latest data available)—and yet our neighbors mostly saw theirs
continue to rise. Investments in durable equipment also showed a disturbing
drop over the last three quarters, making the annual figure fall by 5.2 percent
last year, even as it had consistently zoomed by double digits in previous
years. Are these trends telling us something about business confidence in the
Philippine economy?
We
all know why such business confidence
might be on the wane.
…the
more chilling effect on investments has come from loud antibusiness rhetoric highlighted by the recent attacks on our
private water concessionaires that had come to the rescue of a country
teetering on a water crisis in the late 1990s — but are now portrayed as
devils. The diatribes followed government’s
outright rejection of carefully considered and collegially approved contracts with
the private water service providers, which had been constantly reaffirmed by
previous governments. These and other related recent developments come at the
worst time when FDIs are sliding and domestic investment is losing steam. …
[cielito.habito@gmail.com]
OFF-TRACK AIRPORT PLANS
Philippine Daily Inquirer / 04:08 AM March 16, 2020
The
Naia Consortium, which groups the
country’s biggest conglomerates in a project to address the serious congestion
and infrastructure upgrade issues at the Ninoy Aquino International Airport, now risks dissolution with the
announced withdrawal of businessman
Manuel V. Pangilinan-led Metro Pacific Investments Corp. (MPIC) from the
project.
Apart
from MPIC, Naia Consortium’s members include Ayala Corp., Aboitiz Equity
Ventures, Andrew Tan’s Alliance Global Group Inc., the Lucio Tan-led Asia
Emerging Dragon Corp., the Gotianun family’s Filinvest Development Corp., and
the Gokongweis’ JG Summit Holdings Inc. Their technical partner is Singapore’s
Changi Airports International.
Not
a few were surprised by this turn of events. Two years ago, Pangilinan was
unequivocally committed to the project. His personal view was that Naia needed
a third runway to serve demand once capacity hits the 65-million-passenger
mark.
“The
consortium believes we do have to build a third runway. The only viable option
is to build a third runway, effectively a new airport,” Pangilinan said then.
That
plan was what went into the consortium’s proposal. It had originally asked for
a 35-year concession and proposed to
initially double its design capacity to
65 million passengers in two years to meet medium-term demand. The second phase of the plan, estimated to
cost P250 billion, was to build new
passenger terminals and a third runway as part of the longer-term upgrade plan
for the airport.
But
with the eventual scaled-down scope of the project to just 15 years and an
investment cost of P102 billion without a third runway, Pangilinan might have
ended up doubting the viability of the Naia Consortium’s bid. Uncertainties in dealing with the
government — not to mention the long period it takes to reach an agreement
— may also be partly to blame. After two years, the Naia Consortium is still
negotiating the terms of its proposed contract with the government, the most
recent issue being the extent of expensive real property taxes to be paid to
the local governments of Pasay and Parañaque.
An
example of how exhausting it is to deal with the government was when the
National Economic and Development Authority returned last year the P102-billion
offer of the Naia Consortium and required another round of revisions. That was
two months after Transportation Secretary Arthur Tugade said that the proposal
was acceptable. Tugade said in May last year that he was targeting to award the
project by August 2019. More than half a year since that target, and they are
still negotiating.
Other
people familiar with the negotiations also said the concession on offer for
Naia seemed to carry unacceptably low
returns and disproportionate risk
for the private firms.
There
are also those who believe that MPIC could have been very disappointed in its
investment in Maynilad Water Services Inc., one of two service providers in the
capital whose concession agreements
drawn up decades ago were scuttled
by the Duterte administration
for alleged onerous provisions only recently uncovered. The frequent verbal attacks by President Duterte on the water concessionaires
had already forced the Ayala family to cede majority control of Manila Water
Co., the other service provider, to ports tycoon Enrique K. Razon, perceived to
be more friendly to the administration.
The
Naia Consortium’s proposal is among a number of airport projects, meant to ease
congestion in Manila and nearby provinces, that have schedules in disarray.
The
blow to good governance is very great when the government repudiates contracts
in which there is no evidence of any provisions in the agreement contrary to
law, salutary public policy, or public interest, or that are demonstrably and substantially
prejudicial to the government.
When
the private sector contracts with the government in good faith, the agreements should
be upheld by the government. Sound reasons for doing so are to support and
uphold the rule of law and to attract the participation, sometimes
considerable, of the private sector in economic development. Besides, private
enterprise more often than not brings to bear on public undertakings expertise,
competence, efficiency, and quality that are manifestly lacking in the capacity
of government organizations.
When
the government repudiates contracts that have been closed with the private
sector in good faith, without reasonable basis and even capriciously, the
effect is to undermine the rule of law.
Regulatory
quality—the perception of the ability of the government to permit and promote
private sector development—is also directly degraded.
Government
effectiveness—the perception of the quality of policy formulation and
implementation, and the credibility of the government’s commitment to such
policies—is eroded.
Public domain photo
ReplyDeletePhoto link:
https://commons.wikimedia.org/wiki/File:President_Rodrigo_R._Duterte_with_Manny_Pangilinan_.jpg
Gonzalinho
WRONG ENEMY
ReplyDeleteBy: Cielito F. Habito - @inquirerdotnetPhilippine Daily Inquirer / 04:05 AM December 17, 2019
Are the private water companies serving Metro Manila—and now other areas of the country as well—our “enemies”? With the vicious tirades and threats directed at them by no less than the President himself, one would think that the Manila Water Company Inc. and Maynilad Water Services Inc. are public enemy No. 1.
In my past incarnation as President Fidel V. Ramos’ chief economic planner in the 1990s, I was frequently asked to translate our “Philippines 2000” battle cry then into something the ordinary Filipino could understand. Among other ways of defining it, I used to say that by the turn of the millennium, water would come out of our faucet every time we turned it on. That was a time when getting water out of our faucets 24 hours a day seemed a distant dream for most of us Filipinos. In Metro Manila, less than one-fourth of residences with water connections got water around the clock. Worse, residents in most depressed communities either had to spend a good part of their day lining up at a public water source, or obtain their water from vendors at 10 times the unit cost of what Forbes Park residents paid for water piped into their homes.
…The government, having already seen the benefits of record economic growth and job generation that was partly an offshoot of the Ramos infrastructure privatization strategy, saw privatization of water distribution as the only logical way to go. It went into an elaborate process of bidding out Metro Manila’s water concessions, and as head of the National Economic and Development Authority then, we were part of the rigorous evaluation and decision-making process. President Ramos demanded his highest standard of “CSW” (complete staff work) that led to the eventual designation of Manila Water to serve the east zone, and Maynilad for the west zone. * The bidding process was transparent and competitive, open to public scrutiny and benefited from the participation of the International Finance Corporation of the World Bank Group, applying the highest standards of economic and financial responsibility. *
What has happened since? I can speak more authoritatively on the part of Manila Water, in whose board I served as independent director (with emphasis on “independent”) years later. Just eight years into the concession, * it had provided 24-hour water to nearly 100 percent of its customers, and had brought NRW down to 35 percent, well overshooting the government-set target of 43 percent then. Now it is reportedly at 11.5 percent, among the lowest in the world, where the average is 30-40 percent (Maynilad reportedly has NRW of 27 percent). * Such substantial reduction in leakages has made it possible to deliver more water to more households and establishments, and in effect saved the government from having to build one whole dam to provide an equivalent volume.
I shudder to imagine how our water situation would have been now had we kept it under government management. Just looking at how it has dragged the provision of new water sources for well over a decade—leading to the water shortages we saw earlier this year, yet inordinately blamed on the water companies—I cannot muster the confidence in government to handle things better. The water companies have always been under tight government regulation, and I’d expect our regulators to know better than allow them to make “too much money” and “fleece the public.” Perhaps WE’RE LOOKING AT THE WRONG ENEMY?
https://opinion.inquirer.net/125940/wrong-enemy#ixzz6b0cXZimk
Efficient, competitive privatization of public services and utilities is GOOD GOVERNANCE.
Gonzalinho
BABIES AND BATHWATER
ReplyDeleteBy: Edilberto C. de Jesus - @inquirerdotnet
Philippine Daily Inquirer / 05:03 AM January 11, 2020
How did water concessionaires unjustly exploit the onerous provisions the Duterte administration discovered in their agreements? The original contracts, crafted by the Ramos administration, had been in force for over two decades, overseen by the Metropolitan Waterworks and Sewerage System (MWSS), a government regulatory agency. Also unclear is why their extension by the Arroyo administration was deemed “irregular” enough to deserve cancellation.
President Duterte now tells Maynilad and Manila Water they must accept new contracts or lose the business. They may welcome pre-termination; but will the government that rejected the adverse judgment of an international arbitration court honor liabilities defined in the agreements for this step? Concessionaires must also worry that the contract they must accept has not yet been drafted. When Marlon Brando, as the Godfather, makes an offer that cannot be refused, he spells out the terms. And presents a clear quid pro quo. But even if they submit to an unseen contract, the concessionaires can still be indicted on the nonbailable crime of plunder. Government can then detain the accused for however long it chooses to drag out the investigation and trial. Witness the plight of Sen. Leila de Lima. The President has also declared open season for customers to sue the companies holding the concessions. Never mind if the government approach is moral or just or wise; is it even lawful? Our law schools should describe for us the legal vestments in which the Emperor is attired.
Business might worry about how the handling of the case might impact the international appetite for Philippine investments. Justice Secretary Menardo Guevarra “couldn’t care less about this concern,” disdaining mere profit-seekers in favor of foreign investors imbued with a sense of corporate social responsibility. Perhaps, he might suggest who among the People’s Republic of China (PRC) companies entering the country might serve as model investors.
Edilberto C. de Jesus is professor emeritus at the Asian Institute of Management.
Business Matters is a project of the Makati Business Club (makatibusinessclub@mbc.com.ph).
Read more: https://opinion.inquirer.net/126525/babies-and-bathwater#ixzz6hVWqQddk
“The original contracts, crafted by the Ramos administration, had been in force for over two decades, overseen by the Metropolitan Waterworks and Sewerage System (MWSS), a government regulatory agency. Also unclear is why their extension by the Arroyo administration was deemed ‘irregular’ enough to deserve cancellation.
“…Business might worry about how the handling of the case might impact the international appetite for Philippine investments.”
Weak rule of law is bad governance.
Gonzalinho